Correlation Between Kongsberg Gruppen and Idex ASA

Can any of the company-specific risk be diversified away by investing in both Kongsberg Gruppen and Idex ASA at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Kongsberg Gruppen and Idex ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kongsberg Gruppen ASA and Idex ASA, you can compare the effects of market volatilities on Kongsberg Gruppen and Idex ASA and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Kongsberg Gruppen with a short position of Idex ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kongsberg Gruppen and Idex ASA.

Diversification Opportunities for Kongsberg Gruppen and Idex ASA

-0.15

Correlation Coefficient

Kongsberg Gruppen  Idex ASA

Good diversification

The 3 months correlation between Kongsberg and Idex is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Kongsberg Gruppen ASA and Idex ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Idex ASA and Kongsberg Gruppen is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Kongsberg Gruppen ASA are associated (or correlated) with Idex ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Idex ASA has no effect on the direction of Kongsberg Gruppen i.e., Kongsberg Gruppen and Idex ASA go up and down completely randomly.

Pair Corralation between Kongsberg Gruppen and Idex ASA

Assuming the 90 days trading horizon Kongsberg Gruppen is expected to generate 1.78 times less return on investment than Idex ASA. But when comparing it to its historical volatility, Kongsberg Gruppen ASA is 3.38 times less risky than Idex ASA. It trades about 0.02 of its potential returns per unit of risk. Idex ASA is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  405.00  in Idex ASA on April 24, 2025 and sell it today you would lose (72.00) from holding Idex ASA or give up 17.78% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Kongsberg Gruppen ASA  vs.  Idex ASA

Kongsberg Gruppen ASA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kongsberg Gruppen ASA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical and fundamental indicators, Kongsberg Gruppen is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Idex ASA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Idex ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite conflicting essential indicators, Idex ASA may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Kongsberg Gruppen and Idex ASA

The main advantage of trading using opposite Kongsberg Gruppen and Idex ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kongsberg Gruppen position performs unexpectedly, Idex ASA can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Idex ASA will offset losses from the drop in Idex ASA's long position.

The idea behind Kongsberg Gruppen ASA and Idex ASA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.